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A Contributing Cause to the Greek Government's Financial Problems : Large-Scale Tax Evasion : Analysis of GDP in Euro Area States

By Andis Kaulins

You will find notes on the data and options to download the table below your results.

Shaded cells indicate IMF staff estimates
Country	Subject Descriptor	Units	Scale	Country/Series -specific Notes	2009
Austria	GDP, Current Prices	U.S. $$	Billions		381.880
Belgium	GDP, Current Prices	U.S. $$	Billions		470.400
Cyprus	GDP, current prices	U.S. $$	Billions		23.603
Finland	GDP, Current Prices	U.S. $$	Billions		238.128
France	GDP, Current Prices	U.S. $$	Billions		2,675.915
Germany	GDP, current prices	U.S. $$	Billions		3,352.742
Greece	GDP, current prices	U.S. $$	Billions		330.780
Ireland	GDP, Current Prices	U.S. $$	Billions		227.781
Italy	GDP, Current Prices	U.S. $$	Billions		2,118.264
Luxembourg	GDP, current prices	U.S. $$	Billions		51.736
Malta	GDP, Current Prices	U.S. $$	Billions		7.955
Netherlands	GDP, Current Prices	U.S. $$	Billions		794.777
Portugal	GDP, Current Prices	U.S. $$	Billions		227.855
Slovak Republic	GDP, Current Prices	U.S. $$	Billions		88.208
Slovenia	GDP, current prices	U.S. $$	Billions		49.217
Spain	GDP, current prices	U.S. $$	Billions		1,464.040

As can be seen, the GDP of Germany (population ca. 82 million) is roughly 10 times that of Greece (population ca. 11 million), while the GDP of Greece is nevertheless higher than that of eight other "Euro area" states on this list (half the list). There is in fact not a great deal of difference between the per capita GDP in Greece as compared to Germany.

So where is the money??

How can it be that the Greek government is now in such allegedly deep financial difficulties and is asking the world and the European Union for untold billions of dollars in financial aid when its citizens may be basking in weatlh?

One severe causal problem is discussed by Suzanne Daley at the New York Times in Greek Wealth Is Everywhere but Tax Forms, suggesting that the Greeks are by no means poor, but that a failing morality regarding the correct declaration of taxable income means that the Greek government sees little of the money that is actually earned in Greece -- indeed, as Daley writes:

"Various studies, including one by the Federation of Greek Industries last year, have estimated that the government may be losing as much as $30 billion a year to tax evasion ? a figure that would have gone a long way to solving its debt problems. "

The legitimate question can thus be raised whether tax evasion is at the root of the Greek problem, posing the query as to why countries with a better tax declaration morality, such as Germany, where large tax burdens are shouldered by the citizens and by industry, should suffer the Greek government's financial burdens and bail out Greece, where the money is actually there in the Greek's own communities?

Full post as published by LawPundit on May 02, 2010 (boomark / email).